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INDUSTRYINSIGHT more news at www.heavyliftpfi.com


contracts could in future be developed to cover project cargo operations. “Take the case of a large


energy industry project, for example, where equipment might be shipped to site from all over the world on different carriers. If the details were embedded in a smart contract, no one would have to do anything further in terms of exchanging information because that contract would work like an application.” Smart contracts and the potential of blockchain to improve the efficiency of supply chains and new business models across many industries worldwide, including some of the leading generators of project cargo, were also highlighted in a recently published ‘Blockchain in Logistics’ report from DHL, researched in conjunction with global technology consultant Accenture.


Smart contracts On the subject of smart contracts, for example, the report suggested: “As digitised documents and real-time shipment data become embedded in blockchain-based systems, this information can be used to enable smart contracts.” Those contracts, it added, could automate commercial processes the moment that pre-specified and agreed actions are met. In terms of the potential


relevance of blockchain technology development to some of the industries generating major volumes of project cargo, the report stated that in the oil and energy sectors alone, Accenture has estimated that at least 5 percent of overall total annual freight spend could be reduced through improved invoice accuracy and reduction of overpayments.


Matthias Heutger, senior


vice president, global head of innovation, DHL, confirmed that the report’s observations about smart contracts and freight-spend savings across the


116 May/June 2018


to jointly adopt new ways of creating logistics value. In the highly fragmented logistics industry, consortia that bring together stakeholders will play a key role in achieving blockchain’s potential in the industry,” it stated. “Although competitor


A smart contract is basically a process that has a series of rules embedded in it that are built on blockchain technology.


– Ken Lyon, Virtual Partners


logistics industry as a whole could equally apply specifically to project cargo operations. “Using blockchain


technology has huge potential to optimise the cost as well as time associated with trade documentation and administrative processing of shipments,” he commented. On that point, Lyon suggested that blockchain technology could, however, also create a threat to the information management role of all logistics providers working as intermediaries. At the moment, though, he said it is still too early to say whether that will happen. “What is clear, though, is that any project forwarder or other logistics provider that decides to use blockchain must have information systems capable of supporting it,” stated Lyon.


In that context, he added, if a global standard emerges for supply chain visibility based on blockchain, project forwarders that had “invested a fortune in proprietary systems” might find themselves facing some difficult decisions about those systems. The DHL/Accenture report suggested that one of the other key challenges for forwarders


Blockchain technology has huge potential to optimise the cost ... associated with trade documentation and administrative


processing of shipments. – Matthias Heutger, DHL


and other supply chain players looking to implement blockchain technology is to achieve the necessary collaboration, even between competitors, to ensure such developments produce the maximum value for everyone involved.


“Success depends on all parties working together to transform legacy processes and


collaboration might seem counter-intuitive, economies of scale impact the value of blockchain. When more parties agree to use a single blockchain solution, more value is created for each participating organisation. That is why right now several blockchain consortia are emerging in the logistics industry.”


That last point was echoed by Luca Graf, head of digital innovation for global forwarder Panalpina, which is currently analysing the status of blockchain technology and its use in the supply chain, logistics and other areas.


Blockchain clusters “In general, we will likely see the formation of many blockchain clusters – clusters, for example, that involve ports, carriers, Customs authorities and third-party logistics providers,” he commented. Graf said Panalpina will need to interact with and manage all those different clusters. However, there are still some issues that needed to be addressed. “One important question will be what platform to build on? Another will be how to get partners on board to achieve the desired network effect.”


We will likely see the formation of many blockchain clusters – clusters, for example, that involve ports, carriers, Customs authorities and third- party logistics providers. – Luca Graf, Panalpina


Graf concluded that blockchain is still in the early adoption phase in logistics “and the project forwarding sector traditionally is more conservative and complex than other areas where we do business”. He added that cases of blockchain application, in general, are “very limited but emerging, mostly away from managing the actual movement of physical cargo, for example in the area of digitising Customs documents.”


HLPFI www.heavyliftpfi.com


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